Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The GOP Tax Plan Will Destroy Graduate Education

forbes.com

Post reply on HN
Print view View original

91–99 of 99 posts

Re: The GOP Tax Plan Will Destroy Graduate Education

#91

Post by candiodari »

rayiner wrote: post #46
lewis500 wrote: post #20

I don't understand this. During my PhD my "scholarship" was just basically the university choosing not to charge me money. It's not as though I sat down and set on fire $20k worth of paper every year. So now they have to pay tax on to the amount they would have otherwise charged me? Isn't that kind of a hypothetical concept? Like, can't they say, "Oh the tuition for the civil engineering PhD program is now zero"? Vir…

The proper way to view it is that the university is giving you an "in kind" benefit, in this case a free education. "In kind" benefits are taxable. An employer cannot say, for example, that providing a free apartment to an employee is not compensation, because the employer is "simply choosing not to charge the employee rent."

But obviously this is one variable that can be highly fudged. They can provide apartments at 1/3 the normal cost, but claim to be charging you rent. Or, if you want to go further, have those rooms "available" for guest faculty and you're just holding the key.

Or, well, this is how it's done in some places in Europe, where benefits "in kind" are "taxed". Except they're not taxed. You can't make that happen.

Re: The GOP Tax Plan Will Destroy Graduate Education

#92

Post by rayiner »

candiodari wrote: post #91
rayiner wrote: post #46

Earlier quoted context omitted.

The proper way to view it is that the university is giving you an "in kind" benefit, in this case a free education. "In kind" benefits are taxable. An employer cannot say, for example, that providing a free apartment to an employee is not compensation, because the employer is "simply choosing not to charge the employee rent."

But obviously this is one variable that can be highly fudged. They can provide apartments at 1/3 the normal cost, but claim to be charging you rent. Or, if you want to go further, have those rooms "available" for guest faculty and you're just holding the key. Or, well, this is how it's done in some places in Europe, where benefits "in kind" are "taxed". Except they're not taxed. You can't make that happen.

You can fudge a bit but not that much. In an audit, it's pretty easy to notice if your company is leasing out employees an apartment for 1/3 of market rate. Few companies are going to risk tax fraud charges for that. It's particularly difficult in the case (as with universities) where you're literally in the business of selling the same product a particular price to other people.

Re: The GOP Tax Plan Will Destroy Graduate Education

#93

Post by snowwrestler »

rayiner wrote: post #41

Under the logic of the tax code, tuition waivers should obviously be taxable. The University is basically paying for graduate student labor with a vastly below-minimum wage stipend, along with a very valuable free education. "In kind" benefits (such as the use of an apartment) provided by an employer are generally taxable. That doesn't mean tuition waivers should be taxed. It just means you have to be intellectually…

I want to provide a different view on tax policy here, which is that it is not logical and consistent, nor should it be.

I know the idea it should be is a popular perception among tax lawyers and economists, but our system of government does not put tax lawyers and economists in charge, and that's on purpose.

The reality is that tax policy exists to create specific outcomes in society--either by funding public expenditures, or by creating incentives to shape private expenditures. Politics is how we set and prioritize social outcomes. Tax policy comes out of a political process.

So as you evaluate a change in tax policy, you need to start with what you like and want in society. There's a lot to recommend graduate education, and in particular STEM graduate education (which tends to get the most tuition reimbursement). You don't detect gravity waves, find a vaccine for cervical cancer, or increase solar panel efficiencies without a lot of highly educated people. You don't attract the world's greatest minds without a prestigious, well-funded, and diverse higher education system.

Outcome-oriented thinking helps avoid unnecessary blinders about the scope of the tax system. We don't have to choose between STEM grad students and the EITC. There's a whole huge world of other tax policies out there we can think about.

Re: The GOP Tax Plan Will Destroy Graduate Education

#94

Post by citrate05 »

sharemywin wrote: post #29
sorrymate wrote: post #23

Earlier quoted context omitted.

Can you provide any specific details on how the new suggested tax plan will raise the bar? It seems as though we should be encouraging Graduate and PhD students. It seems as though it would force additional students into taking out loans if their tuition is not waived?

or stop pursuing a graduate degree and go get a job making 30k-50k or more working in industry.

A PhD (and sometimes a postdoc) is a requirement if you want to do more than low pay lab-tech work in some fields, like pharma. In the life sciences a PhD is more of a professional degree.

Re: The GOP Tax Plan Will Destroy Graduate Education

#95

Post by citrate05 »

snowwrestler wrote: post #93
rayiner wrote: post #41

Under the logic of the tax code, tuition waivers should obviously be taxable. The University is basically paying for graduate student labor with a vastly below-minimum wage stipend, along with a very valuable free education. "In kind" benefits (such as the use of an apartment) provided by an employer are generally taxable. That doesn't mean tuition waivers should be taxed. It just means you have to be intellectually…

I want to provide a different view on tax policy here, which is that it is not logical and consistent, nor should it be. I know the idea it should be is a popular perception among tax lawyers and economists, but our system of government does not put tax lawyers and economists in charge, and that's on purpose. The reality is that tax policy exists to create specific outcomes in society--either by funding public expend…

Exactly. If you raise taxes on graduate students, regardless of how precisely the money gets shuffled around, the net result is going to be less money available for research and the necessary labor, and therefore lower research productivity. This tax increase is really a back-door way of cutting federal investment in research (and training researchers).

Re: The GOP Tax Plan Will Destroy Graduate Education

#96

Post by RightMillennial »

candiodari wrote: post #90
njarboe wrote: post #75

Earlier quoted context omitted.

If this goes through, there will be some huge adjustments for graduate students and the research universities that depend on them. With no phase in, this could really hurt current students who thought that they would be getting $15k a year to live on and now have almost nothing, if they have to pay tax on the $30k the university is "giving" them in tuition. If you are have way through a degree program what do you do?…

Or they'll offer 2 "products" from this point forward. One only open to local students and half the price. One open to everyone but full price. I'm sure accountants can figure this one out.

Many schools already do it with their tuition rates per credit hour: the cheapest rate for city residents, then in-state residents, then out of state students. Adding a fourth tier for foreign students sounds trivial.

Re: The GOP Tax Plan Will Destroy Graduate Education

#97

Post by eli_gottlieb »

rayiner wrote: post #46
lewis500 wrote: post #20

I don't understand this. During my PhD my "scholarship" was just basically the university choosing not to charge me money. It's not as though I sat down and set on fire $20k worth of paper every year. So now they have to pay tax on to the amount they would have otherwise charged me? Isn't that kind of a hypothetical concept? Like, can't they say, "Oh the tuition for the civil engineering PhD program is now zero"? Vir…

The proper way to view it is that the university is giving you an "in kind" benefit, in this case a free education. "In kind" benefits are taxable. An employer cannot say, for example, that providing a free apartment to an employee is not compensation, because the employer is "simply choosing not to charge the employee rent."

>The proper way to view it is that the university is giving you an "in kind" benefit, in this case a free education.

Under no circumstances does a company in industry pay an intern $20k/year, "waive" a $40k/year "training fee", and then go to the government and register it as an in-kind benefit. Here in the much-vaunted "real world" outside academia, we may pay trainees and interns less than the full salary, but we don't try to put a tax penalty of half the salary on being an intern.

Re: The GOP Tax Plan Will Destroy Graduate Education

#98

Post by eli_gottlieb »

wbraun wrote: post #77

A similar analysis has been circulating mailing lists at MIT over the past few days and all the grad students are already freaked out by this. As someone who is in the process of applying to phd programs and has already made peace with the lost earnings this really sucks. If this provision makes it into the tax code I will have to strongly reconsider my plans, as will many other students.

It might be better to start the program, and then, if the finances of all academia get nuked by Congressional Republicans, your adviser can help you find some place outside the USA to transfer or something.

Re: The GOP Tax Plan Will Destroy Graduate Education

#99

Post by eli_gottlieb »

blakesterz wrote: post #9

So the plan is... >> Under the new GOP tax plan, however, those tuition waivers would be taxed as regular income... Sensationalist headlines aside... Why is this being targeted in the new tax plan? Usually I can find something with a quote from someone that explains.

Because the vast supermajority of academics vote for Democrats, and because the Republican base has a cultural preference for basing the economy on physical labor in heavy industries. Basically, it comes down to what the Congresscritters passing this consider a "real job". Tax subsidies will be used to transfer money to "real work", and tax penalties to take it away from "fake work".

If you have a graduate degree (spoilers: I do), Congress is now labeling your education and your job as fake work.

Post reply on HN